Tag Archives: ScoutMob

Scoutmob, the Atlanta-based, mobile deals provider, has been taking a fresh approach to the deals space since its launch. It has focused entirely on mobile to leverage geo-location; changed the business model from commissions on deal value to flat fee; and hired dedicated sales and editorial people in each of its 13 markets instead of relying on centralized resources.

The company’s s innovative efforts continue. It recently rolled out Shoppe, an Etsy-like arts feature that lets local artists sell their goods. Over the next couple of weeks, it is unveiling its next moves, including a pilot test of the First Data/CardSpring “OfferWise” loyalty program; and integration with Google Lab’s Field Trip.

The entire deals space – including Scoutmob — suffered a major slow down in growth in 2012 after some slowness in 2011, suggests co-founder Michael Tavani. Hence, a strategic decision instead to stay put where it was, rather than add new markets, and focus on new distribution methods, new revenue streams and features.

Next week, the company will, for instance, roll out the Offer Wise pilot program in Atlanta with a limited number of merchants and consumers. The program, dubbed “Local Loyalty,” lets users receive loyalty points every time they check out of a participating merchants with an acqusition.

The points accumulate network-wide, instead of being limited to individual merchants. Users typically receive a reward on the 10th checkout. Merchants will pay a small monthly fee per redemption, and are being solicited via their affiliation with First Data, the processing giant which handles over 50 percent of U.S. transactions.

The company’s other major initiative is an integration with Google’s FieldTrip, an Android-only App (at this point) which reveals things to do on a mobile maps as users go by them. FieldTrip, which was developed by Google Maps leader John Hanke as an independent effort, launched last October.

Tavani says that inclusion on Field Trip is part of a broader effort to get beyond the “push” of email offers, and compensate for any email fatigue that is impacting the industry.

“This is the next phase of push,” says Tavani. “There is a ton of value in the discovery part of it.” Non-push efforts such as personalization really haven’t had much of an impact for Groupon and others yet, he suggests (although Groupon says it has been able to boost yield by 50 percent with such efforts.) While a certain number of Scoutmob users may be personalizing their mobile app, it is hard to tell how many are doing that.

ScoutMob, the two-and-a-half years old, mobile-centric deals company, has landed a new $3.25 Million round to develop its technology base and add more markets. It is currently in 13 cities and has over one million subscribers. The company, which had previously raised $1.2 Million, also announced a partnership with First Data and will work to implement its payments technologies, which serve over 50 percent of U.S. retail establishments.

Investors include AOL Ventures, Capitol Broadcasting (which has been very aggressive online), Cox Enterprises, Inc., Ben Lerer of Thrillist, and New Atlantic Ventures. At this point, these are purely investments and do not imply integration into Capitol, AOL,Thrillist and various Cox properties, which include newspapers, TV stations, radio stations, cable systems, Kudzu and AutoTrader.

The company stands out from the pack in many ways. Mobile is becoming more important in deals – Groupon says that 40 percent of its deals are now viewed on mobile devices – but ScoutMob also leverages the geo-location technology found in mobile phones to “check in” when deals are redeemed. With this capability, it has built a merchant- friendly model charging a flat fee for leads of $3 or $4 per lead, instead of taking commissions, which may be 30-50 percent of voucher prices

Co-Founder Michael Tavani tells us that that he sees the ad hoc investment group as “pretty good validation of the media and payment space. We’ve always considered ourselves a mobile media company, but payment is the future of this space in a lot of ways.”

Tavani says the deal with First Data is not exclusive – “no payment solution gets you all the way there,” he says. But ScoutMob intends to build on top of First Data’s payment products, including the new First Data/CardSpring collaboration on an API that would enable merchants to easily add promotions and rewards to cards with a single swipe.

Some of the more advanced concepts implicit in that technology, however, may be “3-5 years away,” however, Tavani says. Within 60 days, ScoutMob hopes to add more immediate capabilities, including a “post-payment personalization network” that would enable rewards points for meals or miles for every purchase made within the network, he says.

Tavani also chides industry investors who are primarily West Coast based – his investors are East Coast based. “They refuse to believe that local scales,” he says. “They want to see tens of millions (users) and this isn’t tens of millions. But local decisions are made impulsively,” adds Tavani. “And having just 13 cities lets us be super-curated at the local level. We literally have an editor in each market. Building a brand is the big thing for us.”

It’s obvious that the deals business is going to quickly move to a broader set of offerings. But how? That was the question posed today at ILM West in San Francisco.

Belo Interactive GM Joe Weir noted that deals remains a great space to be in. Demographics of Belo’s deals are dominated by college educated women with a lot of disposable income — deals users extend many missions for Belo, he noted.

But CBS Local Media President Ezra Kucharz said that deals need to change because merchants and consumers are fatigued. Email open rates are declining significantly. And merchants want a higher revenue share.

Kucharz’s solution is to provide a richer experience embracing SoLoMo (social local media) and segmenting deals differently. CBS is adding experiential deals that may be once in a lifetime experiences; aggregating deals; allowing consumer to rate and review deals.

Some things he would like to do, however, aren’t necessarily going to be easy. For instance, he might like to add more deals from big national brands, but “they are being tight with deals,” he says.

Experiential deals have also been embraced by Thrillist, a site that is geared towards young men, or “dudes,” as VP Mike Rothman call\s them. Thrillist has developed experiences such as micro brew pub beer crawls. But these are hard to scale from market to market; What works in New York doesn’t necessarily work in Detroit, says Rothman.

The most extreme position on deals was taken by Michael Tavani, co-founder, ScoutMob. The idea of “Daily deals make us cringe internally at the office,” he says. ScoutMob is a mobile service based entirely for on the go mobile users. Its customers have no idea where they are having dinner that night, and they don’t want to pay in advance for deals, he says.

The company, which considers itself a “reverse FourSquare,” takes $3 or $4 commissions for customers that it points to merchants. Instead of printing out deals, customers simply show the deal coupon on their phones to merchants.

Atlanta-based ScoutMob has cut out the high commissions and has launched as an all mobile site as it prepares for the next wave of deals beyond the world defined by Groupon and Living Social.

The two year old, venture-funded site has 40 employees. It raised $1.5 Million in a Series A round, and is looking at a $5 million Series B round.

The site is now fully launched in New York, Atlanta, Washington D.C. and San Francisco. It also has “lite” versions in Boston, Chicago, Nashville, Dallas, Denver, Austin, Los Angeles, Portland and Seattle. Soon, it will also launch in San Diego, Phoenix, Houston, Miami, Philadelphia and Charlotte.

A key to the site is that it refers customers to deals via a phone’s geo-location capabilities. Indeed, 60 percent of its new traffic is coming in via smartphones, says site founder David Payne. At the end of the month, the site takes a flat $3 or $4 lead fee for each redeemed offer (depending on the size of the market).

Payne told us that he devised the lead fee because he just doesn’t believe that $12 or $15 commissions on a $30 deal is sustainable over time. He compares the lead fee to OpenTable, which charges per diner fees.

Payne also thinks its important for consumers to see “dozens or hundreds” of deals, rather than focus on a single daily deal. Deal curation is also important, and the site has recently been diving into experiential deals such as local tours or coming up, Halloween parties.

To get the best deals, you can’t fake the localness of a site, says Payne. He also notes that the site has been inspired by the way Yelp built local sites around community managers, The fully launched sites have local writers, managers and sales in each market.

Even with that local focus, it takes at least 12 months to hone a subscriber list at the local level, says Payne. He adds that he site now has 300,000 subscribers in Atlanta, its original market, and is moving up in its other markets as well.

Scoutmob co-founder Michael Tavani is speaking on our Deals panel at ILM West Dec. 12-14, along with leaders from CBS Local Media, Belo, Thrillist and Local Offer Network.